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Dean Foods Company Message Board

  • jkwelli jkwelli Feb 13, 2013 9:51 AM Flag

    A number of negatives on DF's future expectations

    "Dean Foods expects to deliver adjusted diluted earnings per share of between $0.45 and $0.55 for the full year 2013. "

    "A recent RFP for private label milk with a significant Dean Foods customer resulted in a loss of a portion of that customer's business which will begin to be reflected in the second quarter of 2013. Dean Foods' management expects 2013 total fluid milk volume to decline in the low-single digits."

    From Pr News wire.

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    • Well, according to Yahoo, DF has 185 million shares outstanding. After the spinoff, WWAV is to have 173 million shares. Rounding down, we can say DF holders will get .93 share of WWAV at the spinoff. At today's price for WWAV ($15.55), the value of the WWAV spinoff per DF share is $14.46. Now, does the DF share price stay at $16 or $17 after the spinoff? No, it's going to drop down to reflect the loss of the WWAV stake. This drop is not going to be a tradeable event. Options prices will be adjusted automatically. For the time being, DF shares have to reflect the value of the WWAV spinoff and the post spinoff DF stubb, if you will. My guess is post spinoff DF shares will trade in the $2 to $5 range, so if DF, like you say, earns $.45 to $.55, the PE for DF will be around 10 or so. The price to sales ratio is going to be very low, maybe less than .1...

      Sentiment: Hold

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